The ABC company has the following estimated costs for the next year:

• Direct materials: $15,000
• Indirect materials: $5,000
• Direct labor: $55,000
• Salary of factory employee: $35,000
• Rent on factory equipment: $16,000
• Sales commission: $75,000
• Advertising expenses: $11,000

It is estimated that 7,000 machine hours and 8,000 direct labor hours will be worked during the next year. What will be the predetermined overhead rate if company applies manufacturing overhead cost to jobs on the basis of direct labor hours?

a)

$7/hr

b)

$8/hr

c)

$9/hr

d)

$6/hr